Navigating the ever-evolving regulatory compliance landscape while maintaining the highest standards of integrity at your institutional firm is a daunting task. Between trying to stay up to date on new requirements to managing risks which could impact your firm and its clients, it’s easy to get overwhelmed.
However, your role is crucial to the success of the firm – acting as the line of defense against risk and potential damages.
Let’s explore the top six compliance challenges your institutional firm faces and what actionable solutions your compliance team can implement to overcome them.
Six regulatory compliance challenges your institutional firm faces
While every firm faces unique challenges specific to their business and practices, an understanding of these high-level risks can help you determine how best to augment your compliance program practices and procedures.
- Regulatory complexity.
Your institutional firm operates within a complex web of regulations with amendments and new requirements creating additional burdens on your firm. Let’s face it, keeping up with these regulatory changes can be a significant challenge. However, not knowing what to do and when could lead to rule violations, hefty fines and reputational damages.
To address this challenge, your compliance team should establish a robust regulatory monitoring process. You can keep up with compliance news or read our blog to stay up to date with the latest developments. Additionally, your compliance team can leverage the knowledge of other experts in regulatory compliance, by hiring a compliance consultant or participating in industry events (like the ComplyConnect Conference & Expo) to gain valuable insight.
2. Data privacy and cybersecurity.
Institutional firms, like yours, handle vast amounts of sensitive client and financial data, making them prime targets for cyber threats. Ensuring data privacy and cybersecurity is essential to protect both the firm and its clients.
In a survey last year, we found that the top regulatory concerns related to cybersecurity and compliance are: safeguarding clients, training and safeguarding your firm’s data and equipment. To protect your firm and safeguard your data, implement robust security measures, such as encryption, firewalls and multi-factor authentication. Regularly conduct security assessments and train employees on cybersecurity best practices. Engage external experts to perform comprehensive audits to identify vulnerabilities and ensure compliance with data protection regulations.
3. Anti-money laundering (AML).
AML regulations are critical for preventing money laundering and other illicit activities. However, the complexities involved in verifying customer identities and monitoring transactions can be overwhelming.
Adopting advanced compliance technology solutions can automate customer due diligence processes, streamline transaction monitoring and enhance suspicious activity detection. Automation can help your compliance team quickly identify patterns and anomalies and address potential risks of compliance violations.
4. Employee compliance training.
Your compliance team knows how to protect the firm, but what about the rest of your firm’s employees? Your compliance team must ensure that all employees understand and adhere to compliance policies and procedures. Otherwise, you run the risk of potential compliance risks.
Conduct regular and comprehensive compliance training to educate employees about regulatory requirements and ethical standards. Additionally, establish a culture of compliance through ongoing communication, reinforcing the importance of ethical behavior and reporting any compliance concerns.
5. Regulatory reporting.
Accurate and timely regulatory reporting is crucial for institutional firms to demonstrate compliance with regulatory requirements. However, the complex and evolving reporting frameworks can pose significant challenges.
Implementing a regulatory compliance solution to assist with your institutional firm’s regulatory reporting can be helpful. By automating your firm’s data collection, consolidation and validation processes, your compliance team improves the efficiency of its reporting processes, ensuring data accuracy and completeness.
6. Recordkeeping.
Effective recordkeeping is essential for institutional firms to maintain a transparent and auditable compliance program. Additionally, regulators, like the Securities and Exchange Commission (SEC), have made it clear how seriously they take these practices and have issued hefty fines for recordkeeping rule violations.
The types of records that firms need to keep are expanding, reflecting the evolving regulatory landscape and new technologies which are proliferating financial services. It is crucial to understand the expanding scope of recordkeeping requirements and implement robust processes. Here are some key records your firm needs to maintain:
- Updated copies of all compliance policies and procedures, including Code of Ethics, insider trading policies and conflicts of interest policies.
- Detailed records of employee compliance training sessions, including attendance records, training materials and assessments.
- Copies of all regulatory filings and other required reports specific to your jurisdiction.
- Records related to vendor due diligence, including third-party service provider risk assessments.
- Records of communications with clients, regulators and employees, including emails, instant messages and other forms of electronic and written correspondence.
At ComplySci, we understand the unique challenges faced by institutional firms in the compliance landscape. With its comprehensive suite of regulatory compliance solutions, ComplySci can be your partner in compliance, working with you to address these challenges with accuracy and efficiency.
To experience the power of ComplySci’s compliance solutions firsthand, schedule a demo today. Our team of experts will guide you through the platform’s features, tailored to your firm’s specific needs. With ComplySci as your compliance partner, you can navigate the complex regulatory environment with confidence and focus on your core business objectives.
Are you ready to partner with us on your compliance program management? Schedule a demo today!